Earnings Hell For Single Stock Traders

Did you catch financial earnings today? Several of the top-10 gainers in the S&P 500 were bank stocks.

I expect hell for earnings season. Netflix exemplifies the wild ride that could be coming this earnings season for single stocks and it's why I held off on buying NFLX calls this morning despite being bullish on XLC. 

I think Netflix could get to within striking distance of $250 per share quickly on a positive earnings report. Positive means however the market interprets earnings and guidance. If Netflix announces a total disaster and the stock jumps 10 percent, that tells me "the market" was pricing in the apocalypse and didn't get it, hence positive.

For the bears, Netflix is also perched about $30 above long-term support. I lean on the bullish partially because I think that support will hold, but the stock could easily hit that level after bad earnings on Tuesday after the bell. Between you me and the wall dear readers, if NFLX tumbles to around $158 per share post-earnings and the overall market is well into rally mode, I plan to be buying. That said, if it loses $158 the next support is the next open gap down around $100 per share. I don't think that would come as quickly, but a really bad earnings report that takes out $158 has a target between $150 and $100. 

Side note: I noticed heavy put buying in XLF today and I almost jumped in to buy calls because everyone thinks this bounce is overdone and falling rates will harm financials. The latter is definitely correct over the coming months, but the direction of rates affects relative performance of financials, not absolute performance. Many of these stocks bounced off or near lows today. If the market rallies, they could run even if long-term yields continue falling.